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ONTARIO 



UBBABX 

TWELFTH ANNUAL REPORT 

OF 

THE ONTARIO ENERGY BOARD 



YEAR ENDING DECEMBER 31, 1971 



c-i. 



-» * 



TWELFTH ANNUAL REPORT 



OF 



THE ONTARIO ENERGY BOARD 



YEAR ENDING DECEMBER 31, 1971 




ONTARIO 



TELEPHONE 
365-2851 



ONTARIO ENERGY BOARD 



790 BAY STREET 
TORONTO 2 



February 16, 1972 



Honourable Leo Bernier, 

Minister of Mines and Northern Affairs, 

Parliament Buildings, 

Toronto, Ontario. 



Sir: 

We have the honour to present herewith the Annual Report 
of the Ontario Energy Board for the calendar year 1971* 



Respectfully submitted, 




y <3s, \ C^-'t^A^y 



A. B. JJackson 
Viae Chairman 



/: CjfaLa. 



I. C. MacNabb 
Vice Chairman 




Member 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/annualreportonta1971onta 



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INTRODUCTION 

This report, submitted in accordance with section 9 
of The Ontario Energy Board Act, summarizes the activities 
of the Ontario Energy Board for the calendar year ended 
December 31, 1971. 

The Board acts under the authority of The Ontario 
Energy Board Act, sections k, &, 9 and 10 of The Municipal 
Franchises Act, and certain sections of The Petroleum 
Resources Act, 1971, The Public Utilities Act and The 
Asses sment Ac t . 

COMPOSITION OF THE BOARD 

The Act provides for a minimum of three and a maximum 
of five Board members. During the year under review, the 
Board consisted of two full-time members and one part-time 
member. 

The principal members of the Board staff are the 
Secretary, the Energy Returns Officer and the Deputy Energy 
Returns Officer, the Board Engineer, and the Supervisor of 
the Energy Studies Section. 



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FUNCTIONS OF THE BOARD 

The major functions of the Board are as follows: 

a) Under The Ontario Energy Board Act 

Approving and fixing the rates and charges for 
the sale, transmission, distribution and storage 
of gas in the Province. 

Ensuring compliance by gas companies with the 
Uniform System of Accounts for Gas Utilities. 

Granting leave to construct transmission pipe 
lines, production lines, distribution lines 
and stations. 

Granting authority to expropriate land for pipe 
lines and stations. 

Recommending the designation of lands as gas 
storage areas and reporting on applications for 
permits to drill wells in such areas. 

Authorizing gas storage operations in designated 
gas storage areas. 

Requiring and regulating the joining of interests 
in gas or oil pools, and apportioning the benefits 
of operation therein. 

Hearing and reporting to the Lieutenant-Governor 
in Council on proposals of gas companies to sell 
their systems, amalgamate with other companies, 
or acquire shares of other gas companies. 

Examining and reporting on any matters pertaining 
to energy referred to the Board by the Lieutenant- 
Governor in Council. 



b) Under The Municipal Franchises Act 

Approving terms and conditions of municipal gas 
franchise agreements, renewing or extending 
expired gas franchises or denying renewals or 
extensions if not in the public interest. 

Granting certificates of public convenience and 
necessity for the supply and distribution of gas 
in municipalities. 



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Under The Petroleum Resources Act, 1971 

Examining and reporting on certain matters 
referred to the Board by the Minister of 
Mines and Northern Affairs . 



GENERAL ADMINISTRATION 

The Energy Studies group on the Board's staff, in 
addition to assisting the Board provides information, analysis 
and advice in a broad field of energy matters affecting the 
Province of Ontario. It collects and maintains certain oil 
and gas statistics, develops informative appraisals, and 
carries out special studies as required on technological and 
economic developments affecting the supply, distribution and 
utilization of all fuels. The Supervisor of the section is 
presently on loan to the Advisory Committee on Energy and 
also acts in a liaison capacity with the Task Force Hydro 
project . 

The Energy Returns Officer and his staff carry out 
continuous surveillance of accounting records of gas companies 
under the jurisdiction of the Board. During the year this 
group was involved in providing financial information to the 
Board in connection with a major rate hearing and in the 
preparation of special accounting Orders related to gas supply 
matters. Both matters are discussed elsewhere in this Report. 

Proceedings before the Board are open to the public 
and, subject to certain limited exemptions, a public hearing 
is held before any Order is .cade. The legislation provides 
that Board decisions may be ippealed to the Court of Appeal 



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and reviewed by the Lieutenant-Governor in Council. 

In accordance with its usual practice, the Board held 
hearings at locations convenient for the Applicants and 
other interested parties. Thirty-one hearings were held 
outside Toronto, in Mount Forest, London, Sarnia, Windsor, 
Chatham, Harrow, Woodstock and Guelph. 

There were no amendments made to The Ontario Energy 
Board Act during 1971, nor were any new Regulations made 
under the Act. 

HEARING STATISTICS 

The Ontario Energy Board Act 

Gas Rates and other charges for gas 30 

Miscellaneous Orders 8 

Leaves to construct transmission pipe lines . . 14 

Land expropriations for pipe lines 9 

Authorization of gas storage operations .... 1 

Drilling of wells in gas storage areas 

(referred by Minister) 1 

The Municipal Franchises Act 

Approval of gas franchise agreements 

(Section 9) 9 

Certificates of public convenience and 

necessity (Section 8) _J£ 

7k 



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RATES 

Following the conclusion of a lengthy hearing into 
an application of Northern and Central Gas Corporation 
Limited for an increase in its gas rates, the Board issued 
its Decision on October 29th. The Board concluded that the 
rate increases proposed by the Applicant would produce an 
excessive rate of return on the test year rate base. The 
Board ruled that a return on rate base of &.6% was reasonable 
and permitted an increase in revenue of $156,000 in the test 
year. Accordingly, the Board authorized the Applicant to 
submit rate schedules designed to increase revenue by not more 
than that amount and on filing of such schedules the hearing 
resumed. 

The Board rendered its supplementary Reasons for 
Decision on December 17th in which it approved the revised 
rates effective January 1, 1972. 

The Board rejected a proposal of the Applicant for 
inclusion of a purchased gas adjustment clause in its rate 
schedules. The Board did however state that the proceedings 
would be kept open with a view to enabling the Applicant to 
pass on certain increased gas costs expected to occur in 1972. 

In addition to the major rates case mentioned above, 
the Board dealt with a number of rates applications of lesser 
importance. Many of these were of a limited nature, e.g. the 
introduction of large volume industrial rates to new areas. 
Others were for rate approval on an interim basis, pending 
final determination by the Bo trd. 



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ACCOUNTING ORDERS 

During the year, the Board made three accounting Orders 
on requests by the three major utilities in the Province, The 
Consumers 1 Gas Company, Union Gas Company of Canada, Limited, 
and Northern and Central Gas Corporation Limited. Each of 
these companies obtains all or nearly all of its gas from Trans- 
Canada PipeLines Limited. This supplier has for some time past 
been before the National Energy Board seeking authority to in- 
crease its rates and it has asserted the need for increased 
revenues to enable it to finance a major construction program so 
that it can deliver adequate gas supplies in 1972 to meet in- 
creased market demands. Pending a final decision of the National 
Energy Board on the application to it, the Ontario utilities 
agreed to pay Trans Canada an additional 2.10 per Mcf for all gas 
delivered beginning January 1, 1972. At their request, account- 
ing Orders were issued by this Board permitting them to defer the 
supplemental cost of gas supply in their accounts pending the 
N.E.B. decision and future consideration by this Board. 

PIPE LINE CONSTRUCTION AND EXPROPRIATION OP EASEMENTS THEREFOR 

The Ontario Energy Board Act prohibits the construction of 
a gas or oil transmission pipe line without leave of the Board. 
If leave to construct a pipe line has been granted, the Board 
may also grant authority to expropriate land for the purpose of 
the pipe line. 



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The cases in 1971 involving pipe line construction varied 
in importance, but several were of* particular interest. The 
Consumers 1 Gas Company applied for leave to construct a 23-mile, 
30" gas transmission pipe line from the TransCanada PipeLines 
Limited system in Markham Township to the R. L. Hearn generating 
station of Ontario Hydro on the lakefront in downtown Toronto. 
A large group of property owners along the proposed route of the 
pipe line were concerned about the safety of the pipe line and 
its proximity to their properties. Following a public hearing 
at which many of the homeowners were represented by Counsel, the 
Board granted approval for the project subject to a minor re- 
location in that portion of the route which utilized an existing 
Ontario Hydro right-of-way. 

Sun-Canadian Pipe Line Company obtained leave from the 
Board to construct 63 miles of a 12" liquid hydrocarbon trans- 
mission line. This pipe line will loop the company's existing 
8" Sarnia to Toronto pipe line in two sections; Petrolia to 
London and Woodstock to Paris. 

Approval was given to the Union Gas Company of Canada, 
Limited for the first two stages of a project which will loop 
its Waterloo to Owen Sound transmission pipe line. The Board 
also approved the construction of several Union Gas pipe lines 
to be built in Windsor and in Essex and Kent Counties to augment 
present facilities and thus provide for increased demands for 
natural gas . 



- 8 - 

As in previous years a special pipe line inspector was 
appointed to act as liaison between the landowners and the pipe 
line companies during construction and clean-up periods and to 
ensure compliance with any terms and conditions of Board* s Orders 
related to the construction. 

GAS STORAGE MATTERS 

The Board is responsible in several respects for control 
of gas storage and, among other things, makes recommendations to 
the Minister with respect to applications for permission to drill 
wells in designated gas storage areas. 

During 1971 Tecumseh Gas Storage Limited, in accordance 
with the Board* s recommendation, was permitted to drill three 
wells in the Kimball- Co linville Pool, two in the Seckerton Pool 
and one in the Corunna Pool. This work completed the Company's 
drilling program in the Corunna and Seckerton Pools but additional 
wells are expected to be drilled in the Kimball- Colinville Pool 
during 1972. 

The joint application of Union Gas Company of Canada, 
Limited and Imperial Oil Limited for authority to inject, store 
and remove gas in and from the Bickford and Sombra designated 
gas storage pools, which had been under adjournment since 1969 at 
the request of the Applicants, was resumed in November of 1971. 
The working storage capacity of these two pools is approximately 
15.9 Bcf. As a result of amendments, Union Gas became the sole 
Applicant with Imperial Oil as an interested party supporting 
the application. 



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TransCanada PipeLines Limited appeared as an Intervenor, stressing 
the need for additional gas storage capacity. The Consumers 1 Gas 
Company and Ram Petroleums Limited appeared as Intervenors object- 
ing to the granting of the application. They outlined alternatives 
to the proposed storage, submitting that there are other existing 
and potential storage areas available at less cost. The hearing 
concluded in late December and the Board reserved its decision to 
consider the evidence and argument. The decision, issued early 
in 1972, authorized gas storage by the Applicant in the Bickford 
and Sombra Pools, subject to certain conditions. 

JOINING OF INTERESTS FOR THE PRODUCTION QP GAS OR OIL 

The Board is empowered by section 24(c) of The Ontario 

Energy Board Act to: 

"require and regulate the joining of the 
various interests within a field or pool 
for the purpose of drilling or operating 
wells, the designation of management and 
the apportioning of the costs and the 
benefits of such drilling or operation." 

In 1971 the Board dealt with four applications under this 
legislation. 

The first application concerned the Willey Oil Pool located 
in Elgin County. International Utilities Petroleum Corporation 
and other persons having working and royalty interests in the Pool 
wished to increase the oil production by a waterflood secondary 
recovery operation. They were unable to obtain the unanimous 
agreement of all interests and applied to the Board for a com- 
pulsory unitization order. A jublic hearing was held in London 
and resulted in a Board Order joining the interests in the Pool. 



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apportioning costs and benefits and designating International 
Petroleum as manager of the unit operations. 

Later in the year Imperial Oil Limited made two applications 
to have Bralorne Oil 6- Gas Limited designated as manager of the 
unit operations being carried on in the Clearville Oil Pool, 
located in Kent County, and in the West Becher Oil Pool in 
Lambton County. These operations are waterflood secondary re- 
covery projects for which Imperial Oil Limited had previously 
been designated manager. The applications were granted following 
public hearings. 

Union Gas Company of Canada, Limited made application for 
the joining of interests for the purpose of producing gas from an 
area comprising 750 acres in Lambton County known as the Bentpath 
Pool. All of the oil and gas leases in this Pool are under the 
control of Union Gas, having been obtained either by it or by 
Imperial Oil Limited. Interventions were filed by a number of 
landowners, seeking better terms for themselves, and fairly 
lengthy public hearings were held. The hearings concluded late 
in December and the Board reserved its decision. 

APPROVALS AND CERTIFICATES 

The Board approved the terms and conditions of nine gas 
franchise agreements, each being between a gas distributor and 
a municipality not formerly served with gas. The Board issued 
certificates of public convenience and necessity for three of 
these municipalities (Deserontc, Erin Village and Erin Township), 
where distribution facilities > ere to be constructed immediately. 



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CONCLUSION 

The Board is following with interest the proceedings 
before the National Energy Board and other developments that 
may affect the cost of gas to Ontario distributors, and will 
do its best to prepare for whatever applications it may receive 
from the Ontario distributors.